Most of the people across the globe are taking car insurance because it refunds their money on any physical damage or occurrence of crash to the vehicle. It refunds all the money that is required to buy a car. You can apply for the best car insurance for insuring your vehicle in the cheapest way. Many insurance companies are coming forward and providing insurance with the best features. It is especially required for costly cars and for the people who carry out car rallies frequently.

Why insurance companies are charging high premiums?
Insurance company’s charges the drivers based on the gathered and analyzed information. It compares their insurance with the competitor before setting the price of insurance. The price of insurance will depend on various demographic factors such as marital status, gender, age etc. One important factor that is considered in car insurance is the type of car. These people are charged more since they are new in driving. Therefore the risk factor is also more. But there are many frauds taking place now-a-days in car insurances around the world. It has been a serious issue in the United States. Because of these frauds the insurance companies are losing around billions of dollars yearly. So, to compensate the loss they are charging high premiums from their customers. Every individual is being charged even who is not accountable for that fraud. The disciplinary actions and potential consequences of this insurance fraud is very high and a big issue.

Few examples of car insurance frauds include putting a fake injury in the form of an accident, showing the proof that the car has been stolen, planning a collision, etc. The person who is trying to take undeserved financial gain from insurance companies is considered as a fraud. This will lead the insurance company to lose billions of dollars per annum. However, for carrying out such crimes, the customers should undergo fines, high penalties, prison sentences for months or years, etc.

Few car insurance companies are giving discounts for the people who obtain good grades or marks in their high school. So, to gain this offer students has to submit their transcript as a proof to companies to grab such offers. Here the students are taking advantage and are altering the marks to gain the discount grades offered by companies for which they are not eligible to.

Types of Insurance frauds

The car insurance frauds are categorized into following types:

Soft insurance fraud: The person committing this type of fraud has to face minor consequences compared to the individuals who commit hard insurance fraud. This insurance means opportunistic, here the person takes advantage of the situation that has already taken place. For example, though the person was genuinely injured in the accident, he makes the insurance company believe that the injuries due to the accident is severe and he has faced pain out of the accident and receive the benefits which he is not actually eligible for, would be considered as soft fraud. This fraud is very easy to commit and highly difficult to detect by the companies. Level of damage for the person who has back or next injuries is highly difficult to detect. The policy holders always overstress their pain and disabilities to gain the claim from the companies.

Hard insurance fraud: This is a serious crime compared to the soft insurance and is intentionally committed by the policy holder. Here the policy holder makes an accident or acts as if the car is being stolen with the intention of gaining money from the insurance company. This is a less common type of insurance fraud, but the insurance company prone to this type of fraud will lose billions of dollars.

Thus, insurance companies have to overcome or minimize such type of car insurance frauds in order to reduce the severities that the company is prone to. The company has to check the medical reports, police reports and consult the doctor before compensating the candidate. The policyholder should be very honest and unbiased before reporting for claims.